news Former Communications Minister Stephen Conroy has accused the board of the NBN company of being “incompetent political hacks” who abrogated their responsibility in allowing the purchase of unfit networks such as Optus’ HFC cable infrastructure in an ill-fated attempt to ensure the Coalition’s Multi-Technology Mix model could be delivered.
Under Labor’s previous near-universal Fibre to the Premises model for the NBN, the HFC cable and copper networks owned by Telstra and Optus would have been shut down. However, the Coalition’s Multi-Technology Mix plan instituted by Malcolm Turnbull as Communications Minister in the Abbott administration is seeing them acquired and upgraded by the NBN company. In Optus’ case, the network buy came at a cost of some $800 million.
However, internal documents leaked this afternoon have revealed that the NBN company is considering overbuilding the Optus HFC cable network, in a move which dramatically validates long-standing criticism that the HFC cable technology could not meet Australia’s future broadband needs.
The documents — dated 3 November — openly state that Optus’ HFC network is “not fully fit for purpose”, with some Optus equipment “arriving at end of life” — needing to be “replaced”. Some Optus HFC nodes are “oversubscribed” compared with Telstra’s HFC cable network and would “require node splits”, while Optus’ cable modem termination systems don’t have “sufficient capacity to support NBN services”.
The document explicitly states that some 470,000 premises in the Optus HFC cable footprint would need to be overbuilt, with a significant impact to the NBN company’s peak funding requirement ranging between $150 million and $600 million. The document also explicitly states that the NBN company will miss its financial year 2017-2018 HFC ready for service target.
Speaking in the Senate this afternoon, Conroy — the architect of the original NBN project as Communications Minister in the Rudd and Gillard administrations — slammed what he called the “folly and lies of those who’ve been peddling the NBN MTM”.
“There’s a reason that we were going to close it down,” Conroy said regarding Optus’ HFC cable network. “Because it wasn’t fit for use.”
“We knew it, Optus knew it.”
“The whole country knew it, but not Prime Minister Turnbull. He decided he knew better than all of the engineers, all of the experts in the country, and Optus today are laughing all the way to the bank.”
Conroy said Turnbull had “no one to blame but himself”, adding: “Virtually every forecast that he has made on the NBN has been hopelessly wrong.”
The Senator also took aim at the NBN company’s board, which signed off on the company’s new MTM model after it was instituted following the NBN company’s Strategic Review in November 2013.
The development of the Strategic Review was administered by J. B. Rousselot, an executive who has close personal links with Malcolm Turnbull (including having worked with the Prime Minister at several companies, and reportedly co-owning a boat together). Rousselot was appointed to a senior role at the NBN company after Turnbull became Communications Minister after the Coalition won the September 2013 Federal Election.
On the NBN company’s board at that time were NBN chairman Ziggy Switkowski — who helped build the Optus and Telstra HFC cable networks during his time as chief executive of those two companies — as well as construction executive Patrick Flannigan, Internode founder Simon Hackett, lawyer and executive Alison Lansley, former BigPond and OzeMail executive Justin Milne, and long-serving corporate executive Kerry Schott.
Hackett has publicly stated that he had confidence in the HFC model for the NBN, although he has been more skeptical regarding the FTTN aspect of the MTM model.
Most of the board was appointed during Turnbull’s tenure as Communications Minister, with the exception of Schott and Lansley, who were appointed during Labor’s administration of the project.
NBN chief executive Bill Morrow joined the NBN company’s board when he took up his role on 2 April 2014.
“The board decided that they had the information needed, to change the direction of the National Broadband Network,” said Conroy. “They made [the decision] based on the Strategic Review.”
Morrow, Conroy pointed out, had recently acknowledged that the NBN company had made its decision to shift to the MTM model without a full knowledge of the detailed costs of re-using the HFC cable and copper networks.
Former NBN chief executive Mike Quigley recently released detailed analysis showing that the up to $15 billion blowout in the cost of the NBN was primarily due to the HFC cable and copper technologies being used as part of the MTM mix approach.
“Now we’re getting all of this debacle coming home to roost,” Conroy said the Senate this afternoon.
“How could a board make a decision to switch to a $56 billion network, without knowing the costs at the time? How can the CEO today say that the board members didn’t know the costs when the board made a decision to shift to a network that is now costing $56 billion?”
“This board were political hacks, they were incompetent, they did not know what they were doing.”